We need a 92.8% rate rise says insurance boss

We need a 92.8% rate rise says insurance boss | Insurance Business America

Insurance News

We need a 92.8% rate rise says insurance boss

Legal requirements clash with regulators as pressure increases on carrier

Insurance News

By
Kenneth Araullo

Citizens Property Insurance Corp, Florida’s insurer of last resort, is proposing a 13.5% rate increase across its personal and commercial lines.

During a rate hearing on Aug. 1, the state insurer unveiled its proposals, which included a 13.9% rise for personal multiperil policies, a 15% hike for personal wind-only coverage, and a 10.3% increase for commercial lines.

Under state law, Citizens’ rates must be actuarially sound and set at levels that are not competitive with the private market to ensure the insurer remains a last-resort option. The legislature has imposed annual caps on rate increases to prevent sudden, large hikes.

However, Brian Donovan, Citizens’ vice president and chief actuary, noted that even with a potential 14% rate increase, 98% of the insurer’s policies would still be competitive with the admitted voluntary market.

Donovan indicated that to make Citizens’ personal multiperil policies non-competitive, rates would need to increase by 92.8%. Furthermore, even with a 14% increase, the rates would not be actuarially sound. For example, personal multiperil rates would require a 23.1% increase to be actuarially sound, while commercial rates would need a 27.9% increase.

Donovan acknowledged that the company is making progress toward achieving actuarially sound rates, partly due to an improvement in the litigation rate for non-natural catastrophe cases.

“This savings reduces the probability and severity of assessments to all Floridians. However, despite this good news, we’re not out of the woods yet,” Donovan said.